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TMI Blog2023 (4) TMI 1372X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner made a reference on 11.5.2016 under the provisions of The Micro, Small and Medium Enterprises Development Act, 2006 before the West Bengal State Micro Small Enterprises Facilitation Council and the respondent was called upon to appear for conciliation before the Council on 4.7.2016. During the pendency of the reference before the Facilitation Council, the respondent appointed an Arbitrator on 23.9.2016 on the basis of a clause in the purchase order. The Arbitrator issued notice to the parties on 4.10.2016 for adjudicating disputes arising out of the purchase order. The petitioner thereafter challenged the jurisdiction of the Arbitrator under section 16 of The Arbitration and Conciliation Act, 1996 which was rejected on 28.2.2017. The Facilitation Council in the meantime fixed its meeting on 27.2.2017 by way of a notice issued to the parties on 13.2.2017. 4. The petitioner also filed writ petitions in the High Court for, inter alia, a direction on the Facilitation Council to dispose of the Reference initiated by the petitioner on 11.5.2016 and restraining the respondent from giving any effect to the invocation of clause 18 of the purchase order. By an order dated 19.4.2017, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract between the petitioner and the respondent pursuant to which the petitioner rendered its services. Counsel submits that the petitioner was registered under the MSMED Act only on 19.4.2013 which would mean that the contract between the parties was entered into prior to the registration of the petitioner as an MSME under the 2006 Act. 10. The controversy in the present matter centres on whether the Facilitation Council under the provisions of The Micro, Small and Medium Enterprises Development Act, 2006 would have exclusive jurisdiction to entertain and decide disputes brought before it by the petitioner. The petitioner claims to be a "supplier" as defined in Section 2(n) of the 2006 Act. Section 2(n) envisages the supplier to file a memorandum with the authority under section 8(1) of the Act where the procedure is outlined. The authority under section 8(1) is as may be specified by the State Government under section 8(4) in case of a micro or small enterprise or the Central Government under section 8(3) in case of a medium enterprise. 11. The first assessment would be whether the petitioner qualifies as a "supplier" under the Act. The answer to this question would in turn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the expiry of 15 days from the day of acceptance or the day of deemed acceptance of any goods or any services by a buyer from a supplier. Explanation (i)(a) to section 2(b) clarifies that the day of acceptance would also mean the day of the actual delivery of goods or the rendering of services. 15. There is no dispute in the present case that the petitioner completed the services in July, 2013 and raised bills subsequent thereto starting from 20.2.2015 with effect from 30.7.2013 for various amounts outstanding to the petitioner as on the date of the demand letter of 27.1.2016. 16. The decision of the Supreme Court in Shanti Conductors Private Limited vs. Assam State Electricity Board; (2019) 19 SCC 529 was rendered on The Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 which was the predecessor of The Micro, Small and Medium Enterprises Development Act, 2006. The Supreme Court construed sections 3 and 4 of the 1993 Act which were pari materia to sections 15 and 16 of the present MSMED Act. Shanti Conductors held that the liability of the buyer to make payment of interest shall arise if supplies are made subsequent to the enforcement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering of services subsequent to the registration. 19. Neither Silpi Industries nor Gujarat State Civil Supplies Corporation hence assist the respondent in denuding the Facilitation Council of jurisdiction to entertain the petitioner's reference under the provisions of the MSMED Act, 2006 on the ground that the petitioner was not a "supplier" at the time of execution of the contract between the parties. 20. To contextualise the facts, the petitioner referred the dispute to the Facilitation Council in relation to the petitioner's demand letter of 27.1.2016 which specifically refers to the bill dated 20.2.2015 with effect from 30.7.2013 since the defect liability period expired in July, 2013. The services for which the payment was demanded were rendered by the petitioner subsequent to 19.4.2013 when the petitioner obtained the registration and ended on 30.7.2013 on which date the petitioner communicated the final completion certificate to the respondent. The letter issued on 20.7.2013 by the respondent would also show that all the activities were scheduled to be performed by the petitioner after 19.4.2013. 21. The unmistakable conclusion from Gujarat State Civil Supplies Corporatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to any amount due under section 17, make a reference to the Micro and Small Enterprises Facilitation Council." 11 25. Section 18(2) confers upon the Council seamless powers to take up the dispute in the form of conciliation and thereafter for arbitration under section 18(3) of the Act upon the failure of conciliation. Under section 18(3), the provisions of The Arbitration and Conciliation Act, 1996 spring to life and the dispute assumes the character and trappings of an arbitration, consequent upon an arbitration agreement under section 7(1) of the 1996 Act. The exclusivity of the jurisdiction of the Facilitation Council is most categorically declared in section 18(4) which also starts with a non obstante clause and specifies that the Facilitation Council shall have jurisdiction to act as an Arbitrator under section 18(4) in a dispute between the supplier located within its jurisdiction and a buyer located anywhere in India. 26. To return to the present dispute, the unilateral act of the respondent in invoking the contractual arbitration clause and appointing the learned Sole Arbitrator on 23.9.2016 after the petitioner made a reference to the Facilitation Council is thus paten ..... X X X X Extracts X X X X X X X X Extracts X X X X
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